Airliners Are Back in Business: Lufthansa
German’s largest airliner stocks lost 50% from peak prices in 2018. Lufthansa stock prices have been seen to be recovering over the last six months amid debt reduction and increased liquidity. The debt situation has changed dramatically to the better as the company is overcoming debts amid strong travel demand. Net debt has decreased to 6.7 billion euros, a level not seen since 2019. So, it may seem that the company has overcome pandemic troubles and left all worries behind. The company increased its traffic by 100% to 102 million passengers in 2022. Revenue was nearly doubled to 32.8 billion euros. Adjusted operating profit (EBIT) reached 1.5 billion euros. This looks very impressive considering 2021 losses of 1.5 billion euros. Lufthansa made this effort only on 72% passenger capacity compared to 2019. Rising capacity utilization and lower fuel prices will contribute to its recovery. Management expects the fleet capacity utilization will rise to 85-90% during 2023. The immediate buying of LHA stocks, that rose by 60% during last few months, may not be a good idea given the risk of correction. But these stocks could be well added to a long-term investment portfolio amid solid recovery of the airline business.
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